U.S. futures dip; Black Friday spending surge - what’s moving markets
Investing.com -- S&P Global Ratings revised its outlook on Micron Technology to positive from stable, citing increasing scale and faster growth due to artificial intelligence demand.
The rating agency affirmed Micron’s ’BBB-’ credit rating while noting that AI has elevated the company’s EBITDA and cash flow, and will increase compounded growth.
Micron’s fourth quarter performance was exceptional with revenue reaching $11.3 billion, growing 46% year over year and 22% sequentially. Management-adjusted gross margin reached 45.7%, up 670 basis points from the previous quarter, with the company targeting 50.5%-52.5% in the next quarter.
The data center segment now represents 56% of fiscal 2025 revenue, surpassing prior peaks of about one-third and reflecting the shift toward AI-driven demand.
S&P estimates that High Bandwidth Memory (HBM) revenue was around 15% of total in fiscal 2025, while premium products represented roughly 35%. The agency expects constrained industry capacity and AI demand to keep supply and demand balance favorable in 2026.
Micron’s strong balance sheet supports the outlook revision with S&P Global Ratings-adjusted net leverage at 0.2x, below the upgrade threshold of 1x.
The company guided capital expenditure net of government incentives to exceed $18 billion in fiscal 2026 from $13.8 billion in 2025, predominantly focused on DRAM capacity and equipment with limited NAND spending.
S&P noted that Micron management refuted recent reports about HBM4 missteps, maintaining that there will be no redesign and the timeline remains intact for shipping beginning in the second quarter of fiscal 2026.
The agency could consider an upgrade over the next 12 months if demand trends for AI products remain intact, industry supply conditions remain favorable, and good trends in demand and supply persist into 2027.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.